[StBernard] More in Katrina zone go uninsured
westley at da-parish.com
Mon Mar 19 23:26:07 EDT 2007
More in Katrina zone go uninsured
Frustrated residents in Katrina zone 'playing Russian roulette' with homes
The Associated Press
Updated: 3:42 p.m. CT March 19, 2007
NEW ORLEANS - Disgusted with his insurance company after Hurricane Katrina,
the Rev. Simmie Harvey let his homeowner policy lapse and left his house in
the hands of a higher power.
Somebody up there must like the 88-year-old Baptist minister: His newly
uninsured house escaped serious damage last month when a tornado ripped
through the city's Uptown neighborhood and toppled a tree that narrowly
missed his home.
"I wasn't lucky. I'm blessed," he said. "I'm going to be all right. The Lord
takes care of me."
Facing soaring premiums or feeling shortchanged by their insurers, a growing
number of homeowners and businesses in Louisiana and Mississippi are "going
bare," or dropping their coverage altogether, insurance agents and consumer
advocates say. Many more are drastically reducing their coverage.
"I have every belief that it's going to be more and more common," said Amy
Bach, executive director of the United Policyholders advocacy group. "If
it's a choice between eating or paying their insurance bills, of course
they're going to eat."
With the new hurricane season beginning June 1, it is a risky strategy.
These people could lose everything in a storm or some kind of tragic
accident around the house.
"You're basically playing Russian roulette with your most valuable asset,"
said Robert Hartwig, president and chief economist of the Insurance
Information Institute, an industry-funded group.
Elderly homeowners - particularly those on fixed incomes and those who have
paid off their mortgages - may be the most likely to go uninsured. Most
homeowners don't have that choice, because mortgage companies require
borrowers to have insurance. Those whose homes are paid off can drop their
policies, unless they are getting government grants or loans that require
"Definitely, you'll be seeing more of this," said Bennett Powell, a Metairie
insurance agent whose firm sold Harvey his policy.
Exactly how many policyholders are going bare is unclear. The insurance
commissioners in Mississippi and Louisiana are not keeping track, and
insurers say they do not how many of their former customers are simply
buying new policies from a different company.
Shopping around can also be a risky strategy, because homeowners in
Louisiana who switch are no longer protected by a state law that bars
insurers from canceling policies that have been in effect for three years or
"Do not shop," said Louisiana Insurance Commissioner Jim Donelon. "That
protection outweighs the advantage of shopping, in my opinion."
Homeowner insurance typically covers wind damage from hurricanes, as well as
damage to the home from fires, auto accidents and other misfortunes. It also
protects a homeowner if someone gets injured on the property. Along the Gulf
Coast, flood insurance is sold separately from homeowner insurance, and made
available thorugh a federal program.
Robert Page, a Houma, La.-based insurance agent and president-elect of the
National Association of Professional Insurance Agents, said the owners of
three large apartment complexes in Houma recently dropped their wind and
hail coverage after their premiums doubled. Page said only a few of his
thousands of customers have gone completely bare after Katrina.
But "it's only the beginning," he said. "In my opinion, it's going to get
worse before it gets better."
Harvey, whose modest ranch-style house has a neat lawn and a long driveway
for his black Cadillac, rode out Katrina in his home during the summer of
2005 and only briefly evacuated the city in the storm's chaotic aftermath.
His roughly $1,800 annual premium did not increase significantly after
Katrina, but he said he elected to drop his Farmers Insurance Co. policy
because the company paid him about $4,000 even though he blames the wind for
about $10,000 in damage to his roof.
"If that's all I can get, I don't have any need to get insurance," he said,
figuring he is better off saving his money than paying premiums.
In Louisiana, insurance companies raised their homeowner rates an average of
13.2 percent in 2006, according to Amy Whittington, spokeswoman for the
Louisiana Insurance Department. Some insurers went far higher.
Many small business owners are feeling the sharpest pinch. The insurer of
last resort for many Mississippi homeowners and businesses is the state's
"wind pool," and its commercial rates have jumped 268 percent since Katrina.
Tom Simmons, who owns three office buildings in Gulfport, Miss., said he
paid $3,070 in premiums for the rental properties before Katrina.
Maintaining that level of coverage this year would cost more than $25,000,
Simmons is considering dropping his wind and hail policies but holding onto
his fire and liability coverage. Even though none of his properties flooded
during Katrina, the thought of heading into the next storm season without
wind coverage is "scary as hell."
"The whole darn area is facing this sort of thing," he said. "The insurance
companies obviously want out. Maybe they're just pricing us out of the
market rather than just saying they're leaving the state."
Jeffrey O'Keefe, president of the Bradford-O'Keefe Funeral Homes on
Mississippi's Gulf Coast, already has scaled back his coverage.
Before Katrina, he paid $61,224 in annual premiums to insure five funeral
homes, two cemeteries and a crematorium. Renewing that $7 million in
coverage would have cost about $781,000, so he reduced his coverage to $2
million. But he is still paying $122,113 in premiums, twice as much as
before the storm.
"As a small business owner, it's really putting a hurt on us," he said.
"It's a bad problem."
C 2007 The Associated Press. All rights reserved. This material may not be
published, broadcast, rewritten or redistributed.
More information about the StBernard